U.S. judge orders UBS unit in Japan to pay $100 million over Libor

Reuters Staff

2 Min Read

(Reuters) - A Japanese investment banking unit of UBS AG was ordered on Wednesday to pay a $100 million criminal fine after pleading guilty to wire fraud in connection with its role in the manipulation of the benchmark interest rate Libor.

The logo of Swiss bank UBS is seen at a branch office in the north-eastern Swiss town of St. Gallen July 3, 2013. REUTERS/Arnd Wiegmann

UBS Securities Japan Co had entered its plea last December 19, one day after its Zurich-based parent agreed to pay about $1.5 billion in penalties to resolve criminal, civil and regulatory probes by authorities in the United States, the United Kingdom, Switzerland and Japan into alleged rate manipulation.

The U.S. Department of Justice agreed at the time not to prosecute UBS, apart from the Japanese unit. In exchange, UBS admitted wrongdoing tied to rate manipulation.

“Make no mistake - for UBS traders, the manipulation of Libor was about getting rich,” Lanny Breuer, who at the time led the Justice Department’s criminal division, said in discussing the settlement last December.

Wednesday’s penalty is part of the global settlement, and was outlined in a joint sentencing recommendation on September 12 by the Justice Department and UBS Securities Japan.

The penalty was approved by U.S. District Judge Robert Chatigny in Hartford, Connecticut. UBS has offices in Stamford, also in Connecticut.

Karina Byrne, a UBS spokeswoman, declined to comment.

Libor is also known as the London Interbank Offered Rate, and is used to set rates for trillions of dollars of mortgages, credit cards, student loans, derivatives contracts and other financial instruments.

Prosecutors accused UBS Securities Japan of scheming from November 2006 to August 2009 to manipulate yen Libor to benefit a senior trader’s trading positions.

More than a dozen banks and brokerage firms have been investigated worldwide over alleged Libor manipulation. Barclays Plc and Royal Bank of Scotland Group Plc have also reached settlements with authorities.

The case is U.S. v. UBS Securities Japan Co, U.S. District Court, District of Connecticut, No. 12-cr-00268.